TY - JOUR
T1 - Strong time-consistency in the cartel-versus-fringe model
AU - Groot, F.
AU - Withagen, C.A.A.M.
AU - Zeeuw, de, A.J.
PY - 2003
Y1 - 2003
N2 - Due to developments on the oil market in the 1970s, the theory of exhaustible resources was extended with the cartel-versus-fringe model to characterize markets with one big coherent cartel and a large number of small suppliers called the fringe. Because cartel and fringe are leader and follower, the von Stackelberg solution concept is appropriate for the supply side of this market. The solution for the cartel-versus-fringe model, presented in the previous literature, proved to be time-inconsistent for a large plausible range of values for extraction costs and initial reserves. This paper provides a (strongly) time-consistent solution for the cartel-versus-fringe model.
AB - Due to developments on the oil market in the 1970s, the theory of exhaustible resources was extended with the cartel-versus-fringe model to characterize markets with one big coherent cartel and a large number of small suppliers called the fringe. Because cartel and fringe are leader and follower, the von Stackelberg solution concept is appropriate for the supply side of this market. The solution for the cartel-versus-fringe model, presented in the previous literature, proved to be time-inconsistent for a large plausible range of values for extraction costs and initial reserves. This paper provides a (strongly) time-consistent solution for the cartel-versus-fringe model.
U2 - 10.1016/S0165-1889(02)00154-9
DO - 10.1016/S0165-1889(02)00154-9
M3 - Article
SN - 0165-1889
VL - 28
SP - 287
EP - 306
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
IS - 2
ER -